UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
November 10, 1997
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Date of Report
(Date of earliest event reported)
EGGHEAD, INC.
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(Exact name of registrant as specified in its charter)
Washington 0-16930 91-1296187
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(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
22705 E. Mission Avenue
Liberty Lake, Washington 99019
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(Address of principal executive offices, including zip code)
(509) 922-7031
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(Registrant's telephone number, including area code)
ITEM 2. DISPOSITION OF ASSETS
SALE OF MAJORITY INTEREST IN SUBSIDIARY
On November 10, 1997, Egghead, Inc. ("Egghead") recapitalized its
wholly-owned subsidiary, Elekom Corporation , a Washington corporation ("Elekom"
or the "Company"). In accordance with the terms of a Series B Preferred Stock
Purchase Agreement, Egghead and two venture capital firms, Hummer Winblad
Venture Partners ("Hummer") and Olympic Venture Partners ("OVP"), collectively
paid cash in the aggregate amount of $2.5 million to Elekom in exchange for an
aggregate 36,689,167 shares of Elekom Series B Preferred Stock. In connection
with the purchase, Hummer received a thirty percent (30%) interest in Elekom
and OVP received a twenty percent (20%) interest in Elekom, with Egghead
retaining a twenty-five percent (25%) interest.
In addition, in accordance with the terms of the Series A Preferred Stock
Exchange Agreement dated November 10, 1997, Egghead was issued 9,172,292 shares
of Series A Preferred Stock of Elekom as consideration for the cancellation of
the debt owed to Egghead by Elekom in the amount of $6,612,524.10. No other
Series A Preferred Stock was issued.
Elekom is a producer of advanced business-to-business electronic commerce
systems whose main product, ELEKOM Procurement, streamlines the procurement
process within large corporations. Elekom was incorporated on August 7, 1995
and prior to November 10, 1997, was wholly owned by Egghead. George P. Orban, a
director of Elekom who is also the Chief Executive Officer and Chairman of the
Board of Directors of Egghead, will remain on the Board of Directors of Elekom.
One of the venture capital firms purchasing shares in Elekom pursuant to this
transaction, OVP, is also a shareholder of Egghead.
SERIES A PREFERRED STOCK EXCHANGE AGREEMENT AND SERIES B PREFERRED STOCK
PURCHASE AGREEMENT
The Series A Preferred Stock Exchange Agreement and the Series B Preferred
Stock Purchase Agreement (collectively, the "Agreements"), and a press release
issued by Egghead to announce the recapitalization of Elekom, are filed as
exhibits to this report and are incorporated herein by reference. The
descriptions of the Agreements herein do not purport to be complete and are
qualified in their entirety by the provisions of the Agreements.
The Egghead Common Shares are quoted on the Nasdaq National Market under
the trading symbol "EGGS."
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(a) Financial Statements
Not applicable.
(b) Pro Forma Financial Information
Not applicable.
(c) Exhibits
EXHIBIT DESCRIPTION
NUMBER
99.1 Series A Preferred Stock Exchange Agreement between Egghead, Inc.
and Elekom Corporation, dated as of November 10, 1997.
99.2 Series B Preferred Stock Purchase Agreement dated as of November
10, 1997, among Elekom Corporation, and the following investors:
Egghead, Inc.; Hummer Winblad Venture Partners III, L.P.; Hummer
Winblad Technology Fund III, L.P.; Olympic Venture Partners IV,
L.P.; and OVP Entrepreneurs Fund, L.P.
99.3 Press Release dated November 11, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned, thereunto duly authorized.
EGGHEAD, INC.
Dated: November 20, 1997 By /s/ George P. Orban
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George P. Orban, Chairman of the Board
and Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
NUMBER
99.1 Series A Preferred Stock Exchange Agreement between Egghead, Inc.
and Elekom Corporation, dated as of November 10, 1997.
99.2 Series B Preferred Stock Purchase Agreement dated as of November
10, 1997, among Elekom Corporation, and the following investors:
Egghead, Inc.; Hummer Winblad Venture Partners III, L.P.; Hummer
Winblad Technology Fund III, L.P.; Olympic Venture Partners IV,
L.P.; and OVP Entrepreneurs Fund, L.P.
99.3 Press Release dated November 11, 1997.
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